TOWARDS SECURING A COMFORTABLE
RETIREMENT
Financial Literacy Programme at Workplace
18 September 2013
Koid Swee Lian, CEO
1
Overview
AKPK’s Roles & Services
Credit & Debit
Financial Counselling
Debt Management Programme (DMP)
Better debt management
DMP Matrices
DMP benefits to credit providers
DMP application process flow
Self Help Guide: Debt Relief Plan
Wise Use of Credit Card
Financial Education Initiatives
POWER! Managing Your Debts Effectively
2
AKPK’s Roles
Set up in 2006 by Bank Negara Malaysia (BNM)
Part of financial consumer protection framework
More resilient household
sector
Avenue for existing & potential
individual
borrowers
to
enhance financial discipline:
• Education
• Credit counseling
• Debt management
Sound & robust banking
system
Facilitates debt repayment
efforts
Minimizes incidence of loan
default arising from poor
debt management
3
AKPK’s Services
- Money
Sense Book/
module
- POWER!
Book/module
- Use simple &
plain language
- Collaborate
with smart
partners
Financial Education
Financial Counselling
Debt Mgt Programme
- Personalised programme
- Review fin. condition & tailor solutions
- Ongoing counselling & education
One-to-one:
- Advise on
credit &
related issues
- Assist in
analysing fin.
situation &
identifying
options to
address
credit issues
SERVICES ARE FREE OF CHARGE
4
Credit & Debt
Credit - Facility to borrow with agreement to repay credit
provider as per terms and conditions in contract.
Debt - When one borrows, one takes on credit & when one
uses a credit facility, one takes on debt.
Example:
One is given a credit card with a limit of RM3,000.
If one spent RM1,000 using credit card, that RM1,000 of
utilised credit now becomes a debt Before: RM3,000 credit available
After: RM2,000 credit still available
Debt: RM1,000
5
Financial Counselling
Who is eligible? Retail consumer
Pre-condition? Attend public briefing
session
Counselling process
Review financial /credit issues
Devise personal budget plan
Cash flow management
Post-counselling decision
Debt management advice
6
Debt Management Programme (DMP)
Assistance
Help resolving financial problems with banks/card issuers
Tailor made solutions for credit problems
Negotiate with lenders on borrowers’ behalf - no legal power
Qualifying Criteria for DMP
Not a bankrupt
Positive net disposable income
Not under advanced legal action
Loan exposure of < RM2 million
7
Better Debt Management
Combination of -
Managing debt level -
•
housing loan
•
Priortise debt payments
•
hire-purchase
loan
•
Consolidate & refinance
•
Guarantor obligations
•
Dangers of borrowing to repay debts
•
credit cards
•
personal loans
•
Student loans
•
•
Dealing with debt problems •
share margin
financing
Late payment notices / debt collectors
•
guarantor’s
liability
Filing for bankruptcy / exiting
bankruptcy
•
Avenues for assistance
8
DMP – Benefits to FIs
 Revive default accounts
 Reclassification to performing status
 Yearly reviews (if any)
 Collections by AKPK
 Borrowers pay into AKPK’s account
 AKPK distributes to various FIs
 DMP terminated upon non-payment
 Waivers do not apply upon termination
 Subsequent defaults – minimal
9
DMP Matrices
Subject
Type of Facility
& Tenure
Restructure /
Reschedule
Monthly
Payments
Waiver
Consideration
Payment Mode
Matrix I
Matrix II
Credit Provider’s Blanket Approval
Obtained
Require Credit Provider’s Approval
Restructuring / rescheduling of unsecured
loans where repayment, inclusive of
proposed interest, is within 10 years
Instalments to cover at least proposed
interest & can be stepped up during
repayment tenure - minimum of 1% of total
unsecured loan exposure or RM30, which
ever is lower, per credit provider
Restructuring / rescheduling of secured loans
(HL and HP) & unsecured loans that do not fall
under Matrix I
Instalments to cover interest at least
Other criteria –
• amount & months in arrears
• value of property
• cost & date of auction
Waivers on interest-in-suspense (IIS) &
penalty interest (PI)/Late Charges (LP),
where applicable
No waiver on loan principal and other
charges.
Waivers on IIS, PI/LP & other charges /
principal (for deserving cases)
HL waiver subject to:
• value of property charged to credit provider
• applicant’s net worth
Instalments paid via AKPK or direct to credit
providers
Instalments paid via AKPK or direct to credit
providers
DMP - Application Process
With complete
documents (including
1st payment slip)
Start DMP
(Matrix I)
Issue Letter
of Offer
MATRIX I
Prepare
Proposal
Average TAT: 8 working days
Public
Briefing
Counselling
DMP Form
Submission
MATRIX II
Prepare
Proposal
Seek FI’s
Consent
Start DMP
(Matrix II)
Minimum TAT: 30 days
INITIAL CONTACT TO COUNSELLING STAGE
 Appointment Form
 Documents Checklist
 Borrower’s loan
details (BLD) Form
 Form CBS01
Public Briefing
Or
Counselling
Eligible for
DMP





Loan Statement
Income Evidence
EPF Statement
CCRIS Report
Legal Letter
Compile
Documents




Appointment &
Counselling
Document Verification
Determine Eligibility
Repayment Capacity
Brief on On-Line DMP
Application & Procedures
Sufficient
NDI
Issue online
DMP Code
For branches with Public
Briefing*
General Enquiry or
Not eligible for
DMP
Options:
• Self Managed – Credit Providers /
BNM LINK
• Petition for bankruptcy
Insufficient
Net
Disposable
Income (NDI)
* KL Main, Penang, Melaka, Johor Baharu, Kota
Kinabalu, Kuching
Applicant submits
DMP Application
MATRIX I
30 Days
DMP
application
submitted
NO
Withdrawal
(after 90 days)
• No submission
• Voluntary
YES
First
payment
in 30 days
NO
Withdrawal
• No payment
• Voluntary
• DMP withdrawn
8 Working Days
YES
DMP Process Flow
• Review & Assess
• Request BLD
• Evaluate & Counsel
• DMP Committee
approve / reject
NO
YES
Start DMP
Issue Notification
Letter
(cc to FIs)
Issue Rejection Letter
• Incomplete information
• DMP declined
Criteria for Matrix I:
• Unsecured loans only
• No principal waiver
• Tenure up to 10 years
MATRIX II
DMP application
submitted
1st payment NOT
required
21 Working Days
8 Working Days
1 Day
YES
DMP Process Flow
• Review & assess
• Request BLD
• Evaluate & counsel
• DMP Committee
approve / reject
YES
Send
Proposal to
FIs for
approval
YES
YES
NO
NO
Withdrawal
(after 90 days)
• No letter required
Issue Rejection Letter
• Incomplete information
Issue Rejection Letter
• Proposal rejected by FIs
Criteria for Matrix II
• Secured / Unsecured loans
• Principal waiver
• Advance litigation: BN / CP
• Tenure > 10 years
2 Working Days
Inform Customer
&
Start DMP
Issue Confirmation
Letter
(cc to FIs
Customer pays to
AKPK or direct to FIs
Self Help Guide: Debt Relief Plan
Step by step guide for borrowers to
negotiate restructuring /rescheduling
of their loan(s)
Empowers
borrowers to take
control of debts
Preparing the monthly budget
Debt repayment proposal
Enhances borrower’s
financial:
Formula for pro-rata payment
• Knowledge
Sample debt repayment proposal
letters: single lender, multiple lenders
/full & final settlement
• Behaviour
• Attitude
Debt relief flowchart
15
Wise Use of Credit Card
Tips on wise use of credit card
Recommend 2 cards only
Make full payment
Pay before maturity period
Avoid cash withdrawal
Debit Card
Quite similar to ATM card
Immediately deducted from your bank account
Can control spending
16
Credit Card Guidelines
Effective 18/3/2011
Eligible age ≥ 21 years old & Income ≥ RM24,000 p.a.
Below RM36,000 p.a.
Credit cards from a maximum of 2 issuers
Max credit limit: ≤ 2 x monthly income per issuer
No increase in credit limit without consent
No credit advance via cheque payable to cardholders
17
Credit Card Benefits
Convenient & efficient mode of cashless payment
Statements assist in tracking expenses for
budgeting purposes
Some credit cards provide free personal accident
& travel insurance coverages
Zero-interest installment plan, flexi-payment
scheme & balance transfer
Loyalty points to redeem goods & services
18
Credit Card
Product Disclosure Sheet
NOTICE ON PAYING ONLY MINIMUM MONTHLY REPAYMENT
If you make only the minimum payment each period, you will pay
more in interest and it will take you longer to pay off your balance.
Please refer to the back page for more information. Alternatively, you
may also refer to the credit card calculator available on our website
or bankinginfo.com.my website.
Sample warning in last statement of year - wef Dec’ 2011
•
•
•
•
Total Credit
Total Interest
Total Finance Charges
Table on Minimum Payment Warning
Source: BNM
19
Minimum Payment Warning
Outstanding balance
RM 3,000.00
Minimum payment due (5% of outstanding balance)
RM 150.00
Payment due date
15 Apr 2011
Minimum Payment Warning: If you make only the minimum payment each period, you
will pay more in interest and it will take you longer to pay off your balance. For
example:
If you make no additional
charges using this card and
each month you pay…
You will pay off the balance And you will end up paying
shown on this statement in an estimated
about…
total of interest of …
Only the minimum payment
4 years and 8 months
RM 1,055
RM 200
1 year and 6 months
RM 424 (Savings RM631)
Source: BNM
20
Credit Card Charges – Example
Balance due :
RM5,452.40
Remaining balance:
Amount paid :
RM5,452.00
Total charges:
RM0.40
RM92.30
Partial payment resulted in loss of interest free period
Interest charged on transaction posting date to due date immediately
following statement date in which transaction was posted
Dining RM121.45 x 27/365 days x 15%
RM1.35
Purchase of Goods RM2,569.00 x 25/365 days x 15%
RM26.39
Others ………
RM19.75
Interest
RM47.49
Finance charges 28/1 to 16/2 RM5,452.40 x 20/365 days x 15% RM44.81
Total charges
RM92.30
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Financial Education Initiatives
1.
Publication of financial articles in newspapers, magazines, etc.
2.
Docu-drama based on real life cases – 13 episodes
3.
Website (information and educational) - Online reference/response
4.
Publication of monthly E-Newsletters ReadSens
5.
Financial education at work place - briefings/talks at private & public entities
6.
Nationwide road shows, workshops, seminars & financial exhibitions
7.
Training of Trainers with smart-partners providing trainers & participants
8.
Distribution of informational booklets on banking & insurance
9.
Micro blogging on finance & credit issues at www.moneypower.my
10.
Personal Financial Management being offered as an elective/co-curriculum subject in 44
universities & 30 polytechnics
11.
University & polytechnic students attend POWER! Programme before graduation
22
Managing Your Debts Effectively
Launched on 19 January 2011
Designed to equip young adults &
potential borrowers on how to
manage their debts effectively &
make informed financial decisions
Targeted education programme for
young adults (18-30 years old), firsttime borrowers & potential
borrowers, including hearing
impaired
Certificate of completion
23
Programme Module
Module
Cash Flow
Management
Borrowing
Basics
Wise Usage of
Credit Card
Key Contents
•
•
•
•
•
•
•
•
•
•
•
Smart living: identify needs and wants
Develop personal budget & cash flow/net worth statement
Knowing financial position & net worth
Common sources of personal credit & key features of credit
facilities
Key lending criteria
Cost of borrowing & setting own debt limit
Rights & responsibilities of a borrower
Different types of cards - debit, credit & charge card
Understanding terms & conditions of credit cards
Using credit cards wisely
Responsibility to protect credit cards
24
Programme Module
Module
Buying a Car
Key Contents
• Factors to consider when buying a car - affordability,
maintenance expenses
• Terms & conditions of hire purchase agreement - term
charges, early settlement & repossession
Buying a
House
•
•
•
•
Managing
your Debts
• Contributions to over- indebtedness & consequences
• Importance of building & maintaining good credit history
• Available advisory & redress services
Affordability and types of house ownership
Understanding terms & conditions of house financing
Understanding rights & responsibilities of a borrower
Consequences of loan default
25
Online Learning Portal: power.akpk.org.my
Useful for IT savvy young adults
Easy & convenient to learn money mgt
Learn at own pace & time
Lively, interactive & amusing animation
IQ games to make learning interesting
Virtual certificate of completion
As at 30/09/12 – 122,794 participants
26
Thank You
Make Prudent
Financial Management
a
Way of Life
1 800 88 2575
www.akpk.org.my
27
Credit Card – Fees & Charges
Finance
charge for
retail
transaction
• 1.125% pm /13.5% pa if promptly settled min. payment due
for 12 consecutive months
• 1.333% pm /16.0% pa if promptly settled min. payment due
for at least 10 mths in a 12 month cycle
• 1. 458% pm /17.5% pa if payment record is not within
either above
• 1.5% / 18% pa for cash transaction
Cash
advance fee
5% of amount drawn, subject to min. of RM15.00, whichever
is higher
Late
payment
charge
Replacement
card
1% of total o/s amount, subject to min. of RM5.00 & max. of
RM50.00
RM10.00 for 1st time & RM50.00 for every subsequent
replacement
28
Credit Card – Fees & Charges
Request for card statement • RM5.00 per monthly statement
Request for sales draft
• RM15.00 per copy
PLUS/ CIRRUS ATM
withdrawal
• RM10.00 for each cash withdrawal
PLUS/CIRRUS enquiry
• RM2.00 for each transaction
Conversion for overseas
transactions
• Rate determined by Visa /MasterCard /JCB
Government service tax
• Bank imposes 1% administration fee
• RM50 for each principal card
• RM25 for each supplementary card
29